Turn-Around in Progress at Cunard Line

Details

June 04, 1996

Turning a money-losing company around in a competitive environment is no easy task, but Peter Ward has intelligently reorganized the British cruise company from top to bottom.

According to Ward, who was appointed chairman and chief executive of Cunard only last year, his objective is basically simple: to get Cunard back into profitable operations and to generate enough cash to grow the business. But he is also the ftrst to admit that it will take time, and he anticipates losses this year and next, before moving Cunard into the black in 1998.

Ward's course to profitability starts from within. "We must make sure that everybody in the company understands our mission," he said. To that end, he is also spending money on training and believes he has turned Cunard's reservation agents into the best in the business. "That is what travel agents are telling us now," Ward explained.

In addition, Ward intends to make Cunard much more visible and has scheduled a television advertising campaign starting this September.

Strengths

Ward believes that Cunard is already uniquely positioned in the market with not only a strong brand name but also with 40 percent of all the berths in the luxury market. "Our thrust will be in the luxury market," Ward said.

Efforts include turning the QE2 into a single seating dining ship, "a truly five-star ship," according to Ward, who said that the passenger capacity would be reduced from 1,750 to 1,500.

Not only will passengers have more space and receive better treatment, crew quarters will also be improved, Ward said.

In addition, Cunard plans to upgrade the ship's entertainment and promises a number of big name entertainers in 1997, including Dudley Moore, Patti Lupone and Tommy Tune.

The QE2 will be reconfigured to support the five­ star concept during her upcoming drydocking this fall.

The other ships in the fleet are also receiving attention, Ward noted, including the Royal Viking Sun which was further upgraded during her recent drydocking in Malta. "It was nothing major," Ward said, "but general hotel items and furnishings to continuously move the Sun even further upmarket."

While focusing on the luxury market, Cunard will also continue to operate the Crown Dynasty and Cunard Countess, said Ward.

While the ships are different and offer different experiences, they will all be consistent in that they will offer quality, Ward explained.

Standardization

A key element of Ward's strategy is to streamline ship operations and purchasing. "Standardization is the backbone of our new efforts," Ward said, explaining that each ship had been operated nearly independently of the others in the past. ''Now, all the ships will benefit from standardization of operations, information systems, and procedures, including purchasing," Ward said. "We will continue to supply our ships on their worldwide itineraries, but will narrow our purchasing to a few suppliers, thus achieving more volume, better quality, better prices, and more efficient transportation.

"These are efforts that may not be seen externally," Ward said, "but are immensely important to the success of the company."

Ward has also consolidated Cunard's offices in New York as world headquarters and there has been some staff reductions.

Profit Centers

Under Ward each ship has become a separate profit center run by a ship management team under the leadership of a director who is the chief executive accountable for that particular ship.

"Each ship has a dedicated team ashore and aboard," Ward explained. "At the end of the day, you get accountability," underscored Ward, who defined the system as a matrix management structure, with support services such as marketing and technical and hotel operations common for all the ships.

Ward also explained that he is involving the crews aboard the ships much more. The crews know their shipboard jobs better than shoreside management, according to Ward, who added that he intends to rely on their know-how and expertise to enhance the passenger experience and to streamline company operations. "The best practices will also be shared across the organization," Ward emphasized.

In addition, Ward believes it is extremely important that the crews also feel part of the organization so that everybody can pull for the common goal.

"You sometimes have to turn an organization upside-down to be successful," Ward added.

Six-day Trans-Atlantic

Next April (1997), the QE2 will launch six-day trans-Atlantic crossings, rather than the five-day crossings which have been the norm in the past. "Six days allow us a more leisurely crossing," Ward said. "We can take a more southerly route (with better weather) and slow down to offer more deck experiences."

In addition, the QE2 will arrive in Southampton in the early morning, allowing passengers more leisurely embarkation and disembarkation, and more time for the cruise line to store up for the next sailing.

There will be 18 trans-Atlantic sailings in 1997.

According to Ward, the QE2 will satisfy SOLAS requirements until year 2005, while the other ships will only require minor work.

"When Cunard is operating profitably, we will look at new ships whether we build or buy. There are all sorts of opportunities out there," Ward said.

"Our ability to turn this business around will determine our future," Ward concluded.